Cisco Reports Positive First Quarter Results, But a Tepid Outlook

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Cisco Systems (CSCO) offered a positive set of first-quarter fiscal results for 2016, but its management admitted that second-quarter guidance was much lower than the market’s expectations. According to the company, macroeconomic challenges and foreign-exchange issues were the primary culprits.

The company’s total revenue growth reached 3.6%, which came in close to the top of the company’s 2%-4% guidance range. Cisco’s non-GAAP EPS also jumped to $0.59, up 9.3% and above the forecasted $0.55-$0.57. Net income (non-GAAP) also increased 7.9% year-over-year.

Deferred revenue, a measurement of advanced payments for products or services that have yet to be delivered, continued growing at a double-digit pace to reach 10.3% in the quarter.

Cisco’s next-generation network routing business had a difficult quarter, with revenue dropping 8%. NGN routing and switching are two of Cisco’s core product lines, and represent a large percentage of their sales. Services growth reached just 1%, which was slow compared to previous quarters.

As for second-quarter guidance, Cisco reports that revenue growth will be between 0% and 2%. Its non-GAAP EPS is projected to be $0.53-$0.55. Last year’s Q2 figure was $0.54.

Chuck Robbins, CEO of the company, stated that order growth in Q1 may be lower than expected due to currency impacts and uncertainty in the macro environment.

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